Kiva general counsel addresses microloan financing


    Small loans can make big differences.

    That was the theme Kiva Microfunds General Counsel Austin Choi stressed during a talk Monday night in Andrews Hall. According to Choi, Kiva and the internet are changing the field of microfinance.

    “Kiva began its microfinance work in Uganda, where Kiva’s founders went to see microfinance working in the field,” Choi said. “What they realized was, ‘Wow, small amounts of capital can do so much good. Wouldn’t it be great if individuals with small amounts of money could also be micro-lenders?”

    Microfinance is a system of financial services designed to help low-income individuals, who typically have difficulty accessing traditional banks and loans.

    Kiva’s website was built around that idea and now connects individual lenders with borrowers around the world through the Internet.

    “Kiva lenders can be all of us,” Choi said.

    The website showcases detailed profiles of entrepreneurs, where lenders pick to whom they want to lend their money. A minimum of $25 is needed to make a loan, making it easy for people of all income levelsto participate.

    The money is then sent from Kiva to a local microfinance institution that gives the money to the borrower. Once the borrower repays his or her loan, the money travels back to the original lender, who can either re-lend or withdraw the money.

    “One thing that I think is great with Kiva in general is that … it allows me to take the same money and re-lend it to someone else,” Brittany Law J.D. ’12 said. “[The borrowers are] not just fulfilling their obligation; they’re allowing other people to be helped with this money too.”

    Law has participated as a lender on Kiva for five years, loaning money to a man in Tajikistan who runs his own grocery store, and to an elderly Peruvian woman trying to keep her children in school.

    “I try to make an effort to loan all over the world and across sectors,” Law said. “To me, that is the best part of it. You can see their stories, and I guess it kind of grounds me every time I go on Kiva. I kind of am just like, ‘Wow … I really need to get a reality check on what I need.’”

    More than 400,000 people around the world have been received Kiva loans since the group’s founding.
    Despite the economic recession in 2008, the Kiva model has flourished due to dependable lenders, finding a better model for the developing world and building a trust within the microfinance field.

    “There were some economic realities that Kiva was well-positioned to navigate. With the economic situation, microfinance institutions were willing to say, maybe it is worth for us to take a chance with Kiva,” Choi said.

    Kiva has been expanding, experimenting with student loans, green energy loans and mobile loans, which are all targeted at alleviating poverty in the developing world.

    However, Choi was hesitant to call microfinance the silver bullet to solving the problem of global poverty.

    “Yes, there are situations where microfinance isn’t going to help, like an immediate disaster situation,” Choi said. “But, once you solve the immediate crisis, how can you re-establish things and give people hope? I think that’s when Kiva and microfinance institutions can come in.”